TEQUESTA, Fla. (March 31, 2008) — The Independent Tire Dealers Group (ITDG) L.L.C. said the captive insurance company its members formed in 2004 has declared an unexpected 10 percent dividend for shareholders.
The total allocation from the Independent Innovative Captive Insurance Co. Inc. amounted to almost $250,000 or 10 percent of the first year's premium, according to ITDG President and CEO Mike Cox. The payout went to more than 40 shareholders of record during the captive's first year, he added.
“We've managed our risk. We're making more interest on our investment than we pay out in claims,” Mr. Cox said.
The captive plan's fiscal year runs from April 1 through March 31 and dividends are paid out annually, Mr. Cox said.
The dividend was unexpected because rarely does a reinsurer of a captive insurance company authorize a dividend after only three years, he noted. He credited Sue Ferguson, ITDG's risk manager, for helping the group's members reduce their claims, and thus their premiums, in three years.
A group of ITDG members formed the captive to insure workers' compensation. The captive is a separate company from ITDG with a separate board of directors. Not all ITDG members are shareholders.
Unlike self insurance, a captive primarily insures the risks of its owner and is managed by the owner and/or the insured members, who usually own the assets. A reinsurance company accepts risks and financial responsibility for the captive.